BILL REQ. #:  H-1002.1 

Read first time 02/05/2007.   Referred to Committee on Agriculture & Natural Resources.

     AN ACT Relating to creating a state revolving loan fund to provide financial assistance to local governments for the conservation of working farms and forests; reenacting and amending RCW 43.79A.040; and adding a new chapter to Title 43 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION.  Sec. 1   The long-range health and environmental well-being of the state requires the conservation of the state's farms and forests for the economic, environmental, and recreational benefit of its people. It is the purpose of this chapter to provide an account to receive funds to provide financial assistance to local governments for the conservation of working farms and forests.

NEW SECTION.  Sec. 2   The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Conservation projects" means any acquisition by a public body of conservation land that provides multiple public benefits for habitat, water quality and quantity protection, recreation, or scenic character, while continuing to be worked economically for agricultural or timber production, that results in permanent conservation from conversion to other than farm or forest uses.
     (2) "Conservation land" means any working farm or forest property, including without limitation any conservation easement or other property interest or development rights therein, and improvements necessary for or incidental to such a purpose.
     (3) "Department" means the department of community, trade, and economic development.
     (4) "Director" means the director of the department of community, trade, and economic development.
     (5) "Eligible cost" means any cost of farm or forest conservation activities.
     (6) "Farm or forest conservation activities" means actions taken by a public body for the following purposes: (a) To finance conservation projects; or (b) to steward or manage conservation land for environmental protection or enhancement and health or human safety either directly or by contract with another public body, nonprofit corporation, or other entity.
     (7) "Fund" means the farm and forest conservation revolving fund in the custody of the state treasurer.
     (8) "Public body" means any state agency, county, city or town, other political subdivision of the state, municipal corporation or quasi-municipal corporation, public corporation, commission or authority under RCW 35.21.730, and those Indian tribes now or hereafter recognized as such by the federal government.

NEW SECTION.  Sec. 3   (1) The farm and forest conservation revolving fund is created in the custody of the state treasurer. All receipts from subsection (2) of this section must be deposited into the fund. Expenditures from the fund may be used only for purposes of this chapter. Only the director or the director's designee may authorize expenditures from the fund. The fund is subject to allotment procedures under chapter 43.88 RCW, but an appropriation is not required for expenditures.
     (2) The fund shall consist of:
     (a) All funds appropriated or authorized by the legislature for deposit to the fund;
     (b) Any other revenues derived from gifts or bequests pledged or donated to the state for the purpose of providing financial assistance for farm or forest conservation activities;
     (c) All repayments of moneys borrowed from the fund;
     (d) All interest payments made by borrowers from the fund; and
     (e) Any other fee or charge levied in conjunction with administration of the fund.
     (3) In administering the fund, the department shall:
     (a) Use accounting, audit, and fiscal procedures that conform to generally accepted government accounting standards;
     (b) Adopt by rule any procedures or standards necessary to carry out the provisions of this chapter; and
     (c) Cooperate with local, regional, and interstate entities regarding priority farm and forest conservation priorities.

NEW SECTION.  Sec. 4   The department shall use the moneys in the farm and forest conservation revolving fund to provide financial assistance to public bodies for eligible costs as follows:
     (1) To make loans to public bodies to pay eligible costs with the following terms:
     (a) The loans shall be made at or below market interest rates, and may be interest free loans, for terms not to exceed fifty years;
     (b) Annual principal and interest payments, if any, on loans made from the fund shall commence not later than one year after completion of any conservation project funded with loan proceeds. All loans shall be fully amortized within their term. Annual principal or interest payments, if any, otherwise required to be made in a year may be deferred for one or more years if the department certifies that the conservation land failed to generate sufficient positive cash flow to fund payments in those years;
     (c) The outstanding loan balance including accrued interest is due and payable in full if ownership of the conservation land is transferred to a party other than a public body. If ownership of the conservation land is transferred to a public body, the loan may be assigned to that public body with the written consent of the department;
     (d) A loan is a general obligation or special fund obligation of the recipient. The recipient of a loan shall pledge revenues derived from conservation land for repayment of loans that are a special fund obligation of the recipient. Conservation land revenues may be pledged to repayment of loans under this chapter on a basis subordinate to the costs of operating and maintaining the conservation land and to the payment of bonds, notes, or other obligations issued by the public body.
     (2) The department may also use the moneys in the fund for the following purposes:
     (a) To purchase insurance for obligations issued by public bodies for farm or forest conservation activities if the insurance would improve credit market access or reduce interest rates, or to provide loans to a public body for this purpose;
     (b) As a source of revenue or security for the payment of principal and interest on revenue or general obligation bonds issued by the state if the proceeds of the sale of the bonds will be deposited in the fund;
     (c) To earn interest on fund accounts; and
     (d) To pay the expenses of the department in administering the fund.
     (3) Beginning with the biennium ending June 30, 2009, the department shall present a biennial progress report on the use of moneys from the fund to the chairs of the senate committee on ways and means and the house of representatives committee on appropriations. The first report is due June 30, 2009, and the report for each succeeding biennium is due December 31st of the odd-numbered year. The report shall consist of a list of each recipient, project description, and amount of the loan.
     (4) The department may not use the money in the fund for grants.

NEW SECTION.  Sec. 5   Any public body seeking a loan from the fund shall:
     (1) Submit an application to the department demonstrating that the farm or forest conservation activity will achieve multiple public benefits if the conservation land is protected as an economically active farm or forest property, as shown by letters of support from stakeholders and qualified experts or inclusion in conservation priority processes such as county comprehensive plans, salmon recovery plans, or other habitat or biodiversity management plans; and
     (2) Demonstrate to the satisfaction of the department that it has sufficient legal authority to incur the debt for which it is applying.

NEW SECTION.  Sec. 6   Loans made under this chapter may be secured by interests in the conservation land as the public body is otherwise authorized by law to grant including without limitation, a deed of trust in the conservation land granted on a priority or subordinate basis or a lease of, easement in, or other property interest in the conservation land. If a public body defaults on payments due to the fund, the state may pursue its remedies under the loan agreement, enforce any interest in the conservation land, and withhold any amounts otherwise due to the public body and legally available for repayment of loans under this chapter and direct that the funds be applied for this purpose.

NEW SECTION.  Sec. 7   The department shall establish by rule policies for reviewing loan applications, establishing loan terms, and administering loans made from the fund to assure that the objectives of this chapter are met.

NEW SECTION.  Sec. 8   Loans made to public bodies under this chapter do not constitute indebtedness for the purpose of any statutory limitation upon indebtedness.

Sec. 9   RCW 43.79A.040 and 2006 c 311 s 21 and 2006 c 120 s 2 are each reenacted and amended to read as follows:
     (1) Money in the treasurer's trust fund may be deposited, invested, and reinvested by the state treasurer in accordance with RCW 43.84.080 in the same manner and to the same extent as if the money were in the state treasury.
     (2) All income received from investment of the treasurer's trust fund shall be set aside in an account in the treasury trust fund to be known as the investment income account.
     (3) The investment income account may be utilized for the payment of purchased banking services on behalf of treasurer's trust funds including, but not limited to, depository, safekeeping, and disbursement functions for the state treasurer or affected state agencies. The investment income account is subject in all respects to chapter 43.88 RCW, but no appropriation is required for payments to financial institutions. Payments shall occur prior to distribution of earnings set forth in subsection (4) of this section.
     (4)(a) Monthly, the state treasurer shall distribute the earnings credited to the investment income account to the state general fund except under (b) and (c) of this subsection.
     (b) The following accounts and funds shall receive their proportionate share of earnings based upon each account's or fund's average daily balance for the period: The Washington promise scholarship account, the college savings program account, the Washington advanced college tuition payment program account, the agricultural local fund, the American Indian scholarship endowment fund, the foster care scholarship endowment fund, the foster care endowed scholarship trust fund, the students with dependents grant account, the basic health plan self-insurance reserve account, the contract harvesting revolving account, the Washington state combined fund drive account, the commemorative works account, the Washington international exchange scholarship endowment fund, the developmental disabilities endowment trust fund, the energy account, the fair fund, the fruit and vegetable inspection account, the future teachers conditional scholarship account, the game farm alternative account, the grain inspection revolving fund, the juvenile accountability incentive account, the law enforcement officers' and fire fighters' plan 2 expense fund, the local tourism promotion account, the produce railcar pool account, the regional transportation investment district account, the rural rehabilitation account, the stadium and exhibition center account, the youth athletic facility account, the self-insurance revolving fund, the sulfur dioxide abatement account, the children's trust fund, the Washington horse racing commission Washington bred owners' bonus fund account, the Washington horse racing commission class C purse fund account, the individual development account program account, the Washington horse racing commission operating account (earnings from the Washington horse racing commission operating account must be credited to the Washington horse racing commission class C purse fund account), the life sciences discovery fund, the farm and forest conservation revolving fund, and the reading achievement account. However, the earnings to be distributed shall first be reduced by the allocation to the state treasurer's service fund pursuant to RCW 43.08.190.
     (c) The following accounts and funds shall receive eighty percent of their proportionate share of earnings based upon each account's or fund's average daily balance for the period: The advanced right of way revolving fund, the advanced environmental mitigation revolving account, the city and county advance right-of-way revolving fund, the federal narcotics asset forfeitures account, the high occupancy vehicle account, the local rail service assistance account, and the miscellaneous transportation programs account.
     (5) In conformance with Article II, section 37 of the state Constitution, no trust accounts or funds shall be allocated earnings without the specific affirmative directive of this section.

NEW SECTION.  Sec. 10   If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION.  Sec. 11   Sections 1 through 8 of this act constitute a new chapter in Title 43 RCW.